This payment — which has been approved by county council, and which officials have hastened to underscore is contractually obligated — will cover mostly debt service and taxes that the hotel chain claims it cannot afford due to low occupancy rates.
After a $7.9 million bailout last year, the total amount contributed by county taxpayers to the hotel is nearly $22 million, more than double the county's total contributions toward Covid rental relief and small business grants.
What a disgrace.
Once again, Hilton has secured these public dollars without opening its books. Like the rest of the industry, it is known that the hotel's occupancy rates were devastated for much of 2020. But the severity of the downtown Hilton's losses and the state of its finances overall remain "proprietary information," even to the impoverished region now compelled to pay the taxes of a multi-billion-dollar global brand.
The dynamic is confusing if you pay any attention to the pronouncements of Hilton CEO Chris Nassetta, who for the record earned more than $21 million in total compensation in 2019. According to him, it sure sounds like the hotel chain is doing A-OK.
In a quarterly earnings call discussing 2020 finances yesterday, Nassetta told investors that Hilton was "stronger, more resilient, and better positioned than ever before."
Despite the challenges in 2020, we opened more than 400 hotels, totaling nearly 56,000 rooms and achieved net unit growth of 5.1%, slightly ahead of guidance. Fourth quarter openings were up nearly 30% year-over-year, largely driven by new development in China, where our focused-service brands continue to command a disproportionate share of industry growth. We also celebrated our 1,000,000th room milestone and the openings of our 300th hotel in China, our 600th DoubleTree hotel and our 900th Hilton Garden Inn. We ended up the year with 397,000 rooms in our development pipeline, up 3% year-over-year.
Nassetta cited a "pent up demand" for both leisure and business travel due to increased personal savings, which he expected would lead to growth in 2021. He was also very pleased to note that "the vast majority" of Hilton's large corporate accounts extended their 2020 negotiated rates and that the Hilton Honors program had grown to 112 million members. The chain was able to mitigate revenue dips with cost control measures across its properties, including cutting general and administrative expenses by 30 percent.
In calls with investors, it's natural for executives to paint the financial picture in favorable terms. But if Nassetta is touting Hilton's growth and optimistic projections with shareholders, why should Cuyahoga County taxpayers believe for one moment that the downtown hotel, which is part of the global network, is too destitute to cover its own taxes and debt payments?
More money down the drain, (i.e. into the pockets of rich corporations), from Armond Budish and his nightmare administration.
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